Prosecution Laches: Lemelson Bar Code and Machine Vision Patents Held Unenforceable
This article was originally published in the Spring 2004 edition (Vol. 4, No. 1) of Thelen Reid's Intellectual Property and Trade Regulation Journal.
On January 23, 2004, Judge Philip M. Pro of the United States District Court for the District of Nevada issued his decision in Symbol Technologies/Cognex Corporation v. Lemelson Medical, Education & Research Foundation, applying the doctrine of prosecution laches to hold certain key Lemelson bar code and machine vision patents unenforceable. Lemelson has 30 days to appeal Judge Pro's decision to the Court of Appeals for the Federal Circuit ("CAFC").
The late Jerome Lemelson may not have not invented the "submarine" patent, but he was arguably the most prolific practitioner of the art of paper submarine patents.
The patents were "paper" because Lemelson did not practice his inventions. In order to obtain a patent, there must be conception plus reduction to practice. Reduction to practice, however, does not require that the applicant have actually built a prototype or used the method. Reduction to practice can be "constructive" Â– by including in the application a written description of the invention sufficient "to enable any person skilled in the art to which it pertains...to make and use the same." 35 U.S.C. § 112, 1.
The patents were "submarine" because they remained pending in the Patent & Trademark Office until the technology allegedly covered by the patents came into widespread commercial use, at which time Lemelson "surfaced" the patents (by allowing them to issue) and then collected royalties.
In 1954 and 1956, Lemelson applied for patents on methods and devices for inspecting and measuring objects. Thereafter, by filing continuation and continuation-in-part (CIP) applications, Lemelson maintained co-pending applications claiming priority from the 1956 application, adding claims that read on bar code or machine vision systems subsequently commercialized by others. In 1989, Lemelson notified the major automotive and consumer electronics manufacturers that they were infringing Lemelson patents by using machine vision equipment, and demanded royalties. Lemelson did not sue the manufacturers of the machine vision equipment, as these were small potatoes compared to the consumer products manufacturers. In 1992, most of the Japanese and European automobile and electronics companies capitulated.
"The Big Three" (Ford, GM and Chrysler), however, refused to capitulate, and in September 1992, Ford brought a declaratory relief action against Lemelson in the United States District Court for the District of Nevada, alleging that the Lemelson machine vision patents were unenforceable on the ground of laches for undue delay in prosecution. Ford and Lemelson both moved for summary judgment. In June 1995, Magistrate Judge Phyllis Halsey Atkins found that "Lemelson's use of continuation applications has been abusive" and recommended that Ford's motion for summary judgment be granted. Judge Lloyd George initially agreed with Magistrate Judge Atkins, adopting her report in an order entered in April 1996.
But, then along came Judge Lowell Jensen's decision in Advanced Cardiovascular Systems v. Medtronic (N.D.Cal. 1996) 41 U.S.P.Q.2d 1770. In striking Medtronic's affirmative defense that the patent-in-suit was unenforceable due to "unreasonable, improper and undue delay" in the prosecution of the patent, Judge Jensen held:
Furthermore, since there is no allegation that plaintiff violated any of the statutory or regulatory rules for prosecuting patents, there is no improper delay in the prosecution of this patent to justify a laches or inequitable estoppel defense. The '346 patent issued from a series of "continuation" applications relating back to the original application filed on January 6, 1987. Under 35 U.S.C. Section 120, the prosecution of this patent dates back to the filing of the original application. [citation] By providing this relation back doctrine, Congress evidenced a clear intent to regulate the timing of continuation applications. Accordingly, only Congress can determine what constitutes unreasonable delay in the filing of such an application. It is not for this Court to decide that the prosecution of a patent according to the rules of the PTO is unreasonable and inequitable. Since defendant's laches and equitable estoppel defenses ask the Court to make precisely this determination, the Court strikes these defenses with prejudice. Id. at 1774-75.
Upon reconsideration, Judge George agreed with Judge Jensen and, in April 1997, vacated his order adopting Magistrate Judge Atkins' recommendation, and instead denied Ford's motion for summary judgment based upon Lemelson's undue delay in prosecuting his claims. Ford Motor Co. v. Lemelson (D.Nev. 1997) 42 U.S.P.Q.2d 1706, 1711. Judge George certified his order denying Ford's motion, but the CAFC refused to grant interlocutory review. 1997 U.S.App. LEXIS 23628. Ford settled with Lemelson on June 1, 1998, and the case was dismissed on June 9, 1998. GM and Chrysler also agreed to pay.
Lemelson passed away on October 1, 1997, just weeks after the CAFC refused to hear Ford's appeal of Judge George's ruling, but his foundation lived on. After settling with the Big Three in June 1998, the Lemelson Foundation demanded royalties from over a thousand companies using machine vision or bar code reading equipment. Many agreed to pay, and some sought indemnification from the manufacturers of the machine vision and bar code reading equipment.
Then, in 1999 bar code reader manufacturers Symbol Technologies, Accusort Systems, Intermec Technologies, Metrologic Instruments, PSC, Tecklogic and Zebra Technologies (collectively "Symbol") went on the offensive, filing a declaratory judgment action against the Lemelson Foundation in the United States District Court for the District of Nevada. Machine vision equipment manufacturer Cognex Systems followed, and the two cases were assigned to Judge Philip M. Pro.
Both the Symbol and the Cognex actions alleged in their respective fourth causes of action that:
Lemelson unreasonably and inexcusably delayed seeking and obtaining claims of the Lemelson patents-in-suit with consequent harm to plaintiffs and other members of the public. His unreasonable and inexcusable delays constitute laches and render the patents-in-suit unenforceable.
Lemelson moved to dismiss the fourth causes of action for failure to state a claim upon which relief could be granted. Judge Pro summarily deferred to Judge George's holding in Ford v. Lemelson adopting Judge Jensen's holding in Advanced Cardiovascular Systems v. Medtronic:
It is unnecessary to go into a lengthy analysis of the pertinent case law since the same issue was decided by this Court in 1997. In Ford Motor Co. v. Lemelson, 42 U.S.P.Q.2d 1706 (1997), the Honorable Lloyd D. George, Senior United States District Judge, held that "Lemelson's use of the continuation application process may have exploited an open area of patent practice, [but] the Court should not intervene in equity to regulate what Congress has not." Id. at 1707. It is therefore improper to introduce the equitable doctrine of laches into the statutory scheme of continuation practice. Id. at 1709. This Court agrees with the decision and reasoning in Ford Motor. Thus Plaintiffs' fourth count fails to state a claim upon which relief can be granted. Symbol Technologies v. Lemelson, United States District Court for the District of Nevada, Case No. CV-N-99-0397, ORDER, Filed 03/20/2000, Docket No. 44.
This time, however, the CAFC agreed to hear an interlocutory appeal on the issue of "whether, as a matter of law, the equitable doctrine of laches may be applied to bar enforcement of patent claims that issued after an unreasonable and unexplained delay in prosecution even though the applicant complied with pertinent statutes and rules." Symbol Technologies v. Lemelson (Fed.Cir. 2002) 277 F.3d 1361, 1363. In January 2002, the CAFC answered the question in the affirmative: "Because the district court incorrectly concluded that the defense of prosecution laches was unavailable as a matter of law, we reverse the judgment and remand the case." Id. In October 2002 the Supreme Court denied Lemelson's petition for a writ of certiorari. 2002 U.S. LEXIS 6056.
On remand, the consolidated Symbol and Cognex cases proceeded to a bench trial before Judge Pro in Las Vegas from November 18, 2002 through January 17, 2003 (27 court days), followed by several hundred pages of post-trial briefing through June 2003. On January 23, 2004, Judge Pro issued his Findings of Fact and Conclusions of Law and Judgment. Symbol Technologies v. Lemelson, United States District Court for the District of Nevada, Case No. CV-S-01-0701 (hereinafter "CV-S-01-0701"), Docket Nos. 498 and 499. (Available at http://pacer.nvd.courts.gov.)
Subsequent to the CAFC's 2002 decision upholding prosecution laches as a matter of law, and indeed during trial of Symbol and Cognex on remand, the Supreme Court decided Eldred v. Ashcroft (January 15, 2003) 537 U.S. 186, upholding the constitutionality of the Copyright Term Expansion Act of 1998. In its post-trial brief, Lemelson argued the Supreme Court's statement, that "limited time" as used in the Copyright and Patent Clause (article I, § 8, clause 8 of the Constitution) is any period shorter than perpetual duration (537 U.S. at 783), means that the overall time that a patent application is pending does not matter. CV-S-01-0701, The Parties Joint Post-Trial Brief, Section III Â– Prosecution Laches, Docket No. 485, at pp. 37-39. Judge Pro rejected this argument:
Eldred held that the statutory extension of the existing copyright term does not exceed the power of Congress under the Constitution. The question before the Court here, however, is not whether Congress can modify the statutory term of a patent, but whether an individual patent applicant can do so unilaterally. CV-S-01-0701, Findings of Fact and Conclusions of Law, Docket No. 498, at p.9.
Judge Pro then went on to make the key factual finding that:
Applying the foregoing standard to the preponderance of evidence adduced at trial, the Court finds that Lemelson's 18- to 39-year delay in filing and prosecuting the asserted claims under the fourteen patents-in-suit after they were first purportedly disclosed in the 1954 and 1956 applications was unreasonable and unjustified and that the doctrine of prosecution laches renders the asserted claims unenforceable against Symbol and Cognex. Id.
However, nothing in the Symbol/Cognex litigation disturbs previous CAFC holdings that it is legitimate to add claims during prosecution to read on others' devices, provided that such claims find support in the original specification. e.g., Kingsdown Medical Consultants v. Hollister (Fed.Cir. 1988) 863 F.2d 867, 874; PIN/NIP v. Platt Chemical (Fed.Cir. 2002) 304 F.3d 1235, 1247. In order for prosecution laches to render such a claim that is added later to be unenforceable, there must be an "unreasonable and unjustified delay in asserting the claim."
Unfortunately, even if affirmed on appeal, Judge Pro's decision does not provide bright-line guidance on what constitutes unreasonable and unjustified delay. As Judge Pro observed: "If the defense of prosecution laches does not apply under the totality of circumstances presented here, the Court can envision very few circumstances under which it would." (CV-S-01-0701, Docket No. 498 at p. 11.) In other words, the delay in prosecution of the Lemelson bar code and machine vision patents was so egregious that no one else is likely to come close, so we don't know where the line is. We will have to wait for other cases to define the extent of reasonable and justified delay.
Finally, while the Symbol/Cognex litigation is immensely important to the industries that make or use bar code and machine vision equipment, the doctrine of prosecution estoppel can be expected to become less significant in the future. When Lemelson started filing continuation applications on bar code and machine vision technology, the term of a patent was 17 years from date of issue. In 1995, however, the law was changed to provide that the term of a patent would be from issuance to 20 years from the date of the first application from which the patent claimed priority. Thus, there is now less to be gained from endless continuations.
For more information, please contact:
W. Samuel Niece, P.E.
Robert E. Krebs
©2004 By Thelen Reid & Priest LLP. This article has been published as an information service to clients and friends. Please recognize that the information is general in nature and must not be relied upon as legal advice. The authors, listed above, or your Thelen Reid attorney contact, would be happy to discuss the information in this article in greater detail and its application to your specific situation. We welcome your comments and suggestions.